Feeds

Google India slapped with £8.7 MILLION tax penalty

Search giant accused of misleading tax office

Maximizing your infrastructure through virtualization

Google is facing more embarrassing revelations about its tax dealings after its Indian business was accused of misleading the government, violating accounting rules and slapped with a Rs76 crore (£8.7m) fine.

The penalty order, which Google is appealing, relates to the tax year 2008-9 and if upheld will ensure the search giant pays tax on all of its Indian advertising revenues in India.

The tax office said Google India credited Rs119.83 crore (£13.7m) to Google Ireland for distribution fees without deducting tax at source according to the tax treaty between the two countries, Economic Times reported.

The penalty order, seen by the ET, states the following:

The entire activity of (Google's) AdWords Programme and the revenue earned thereon has happened in India with both the advertisers as well people making use of the advertisements situated in India. To this extent, the income of M/s Google Ireland Ltd was held to be accrued as well as arisen in India itself.

The situation is complicated further as many regional Google businesses route their earnings via the Netherlands to an entity in the tax haven of Bermuda – an entity which is actually a subsidiary of Google Ireland, according to ET.

The tax office has now apparently recalculated Google’s profits to take account of the “excessive and unreasonable” distribution fees to Google Ireland. It also slammed the search giant for breaking local accounting laws by declaring "revenues on a net basis instead of showing it on a gross basis".

India appears to be taking a more robust approach to The Chocolate Factory’s tax avoidance than is happening in the UK, although Amazon, Google and Starbucks all got a grilling by MPs at the Public Accounts Committee this week.

Google was singled out for being “immoral” in its funnelling of funds out of the UK. Despite generating £2.5bn in UK sales in 2011 it paid tax of just £3.4m.

Things could get tougher in the UK too, with the chancellor rumoured to be announcing new tax avoidance plans in the autumn budget. ®

Top three mobile application threats

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Nadella: Apps must run on ALL WINDOWS – PCs, slabs and mobes
Phone egg, meet desktop chicken - your mother
White? Male? You work in tech? Let us guess ... Twitter? We KNEW it!
Grim diversity numbers dumped alongside Facebook earnings
Microsoft: We're making ONE TRUE WINDOWS to rule us all
Enterprise, Windows still power firm's shaky money-maker
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
prev story

Whitepapers

Top three mobile application threats
Prevent sensitive data leakage over insecure channels or stolen mobile devices.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.